NON-ENERGY IMPORT DEMAND FUNCTION IN TURKEY: NEW EVIDENCE
Journal Title: Asian Economic and Financial Review - Year 2016, Vol 6, Issue 12
Abstract
This study estimates the non-energy demand function of Turkey in the period of 2003:Q1-2015:Q3. We estimated a long run and a short run model of imports, based on the traditional import approach. Then we analyzed income and price elasticity of imports using cointegration methodology with multiple structural breaks of Maki (2012). The empirical results show that real non-energy imports cointegrate with real domestic income and relative price with significant structural breaks in 2006:Q1 and 2010:Q3. Contrary to theory, domestic income carries negative coefficient, which suggests that an increase in income will decrease the level of non-energy import in the case of Turkey. Also, cointegration results suggest that non-energy import is income and price elastic in the long-run; income elastic, but price inelastic in the short-run, and income and price elasticity of non-energy import demand in Turkey, are time-varying due to the structural breaks.
Authors and Affiliations
Arzu Tay Bayramoglu*| Department of Economics, Bulent Ecevit University, Zonguldak, Turkey; Department of Economics and Finance, Lamar University, TX, USA, Deniz Sukruoglu| Department of Economics, Bulent Ecevit University, Zonguldak, Turkey
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